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Summary and Comments

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Category: 

Banking

Date: 

1998-04-09 11:15:58

Subject: 

International Banking Conference on Y2K: Crisis Mode

  Link:

http://biz.yahoo.com/finance/980408/millennium_2.html

Comment: 

The Bank for International Settlements is the clearing house for the world's central banks. On April 8, it held a symposium on y2k. The press reports indicate that the BIS takes this problem very seriously.

The following is especially disturbing:

"Tom de Swaan, chairman of the Basle Committee on Banking Supervision and executive director in charge of banking supervision at the Dutch central bank, said it would be impossible for Group of 10 regulators (Belgium, Britain, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland and the United States) to guarantee a bank or financial institute is ready for the millennium."

This is from a Reuters report (April 8).

* * * * * * *

BASLE, Switzerland, April 8 (Reuters) - Financial regulators and executives said Wednesday that urgent preparations were underway to avert possible network failures when computers tick over to the year 2000, a problem that could threaten global finance and lead to a worldwide recession. Speaking at a conference at the Bank for International Settlements (BIS) here, New York Federal Reserve president William McDonough noted that the world's payment systems, such as clearing organisations, settlement agents, securities depositories and others were ``intricately connected.''

``An operational breakdown resulting from insufficient year 2000 preparations by any one of them may have an impact across payment systems,'' McDonough said.

A worst-case scenario could threaten the entire financial system, he added. . . .

In the United States, supervisors plan to have reviewed ``at least once'' by June 30, 1998 the state of readiness for potential millennium problems at every institution they supervise. . . .

``If the current outstanding issues are any indication, we will have our hands very full,'' McDonough said.

Part of the danger lies in the fact that much of the world's money is booked or transferred electronically and the amounts involved tend to be staggering.

The New York Fed's daily payment settlement activities, for example, total roughly $2.5 trillion dollars, equal to about one-third the U.S. annual gross domestic product.

Contingency plans if computers fail because of a wrong reading of ``2000'' are also being put into place. But upsets could involve everything from power grids to air travel and defence. . . .

Some 20 international banks on Wednesday also announced a new initiative to tackle the problems jointly, forming the Global 2000 Co-ordinating Group. . . .

Tom de Swaan, chairman of the Basle Committee on Banking Supervision and executive director in charge of banking supervision at the Dutch central bank, said it would be impossible for Group of 10 regulators (Belgium, Britain, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland and the United States) to guarantee a bank or financial institute is ready for the millennium.

Link: 

http://biz.yahoo.com/finance/980408/millennium_2.html

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